Who Responsible for ADA Compliance Lawyers Against Lawsuit by jolinmilioncherie


									                                 Who’s Responsible for
                                  ADA Compliance—
                                 Landlords or Tenants?
                                                             BY DAVID WARREN PETERS

     CONSIDERABLE MISUNDERSTANDING HAS ARISEN between com-                    pened to be sued. Some landlords have also taken on obli-
     mercial landlords and tenants about the responsibility of                gations that should have been borne by (or at least shared
     each for compliance with laws—as well as the defense and                 with) their commercial tenants.
     settlement of lawsuits—relating to access for the disabled,
                                                                              The failure to have all necessary parties involved in an
     under terms of many common commercial leases.
                                                                              ADA/access lawsuit at the earliest possible point will most
     Misconceptions about the obligations of commercial tenants
                                                                              likely result in unnecessary and avoidable expense to all
     under many standard commercial “triple net” and other
                                                                              involved. For example, even if a tenant had an obligation to
     leases have caused many firms to close, dismiss employees,
                                                                              defend a lawsuit, to the extent the lawsuit seeks injunctive
     or file bankruptcy—in many cases unnecessarily.
                                                                              relief (ie, a court order, for example, requiring that structur-
     This article concludes that (1) in most cases, neither land-             al renovations be made), the tenant might not have the legal
     lords nor tenants will be able to state, as a matter of law, that        right to make such renovations. Similarly, if a landlord is
     they are relieved from their responsibility to provide access            the sole defendant in a lawsuit and part of the resolution
     for the disabled, and (2) the standardized terms of many—if              requires that the restroom not be available to the public, if
     not all—common commercial leases most likely will not, in                the tenant is not a party to the proceedings, s/he may object
     themselves, be sufficient to transfer this obligation from one           to such a reduction in their leasehold rights.
     to the other. For these reasons, commercial landlords, ten-
                                                                              Too often, the parties realize too late that an essential party
     ants and others may well be indispensable parties in ADA
                                                                              has been omitted from a case, and that party will, quite
     (the Americans with Disabilities Act of 1990, 42 USC
                                                                              appropriately, object to being brought in at the “last
     §12101) and access lawsuits, and leases should be immedi-
                                                                              minute” when important decisions may have been made
     ately revised to clearly confirm responsibility for compliance
                                                                              without them. Because a plaintiff may well be entitled to an
     with access laws.
                                                                              award of attorneys fees during the entire time the defen-
                                                                              dants try to sort out responsibility, it is essential that all con-
        NOT INCLUDED IN AN ACCESS LAWSUIT                                     ceivably appropriate parties be joined in an access lawsuit at
     Many have suggested that a major part of the current crisis              the earliest possible opportunity, even if some are later dis-
     of ADA/access lawsuits is the misunderstanding between                   missed.
     landlords and tenants as to which of them is responsible for
     complying with access laws or defending lawsuits involving
     them. Many tenants have mistakenly undertaken the defense                  About the Author
     of lawsuits, and even made major structural renovations,
                                                                                Attorney David Warren Peters is Vice President and General
     because they incorrectly believed that their leases required               Counsel of The Ascervus Group of Companies and the devel-
     it; others just started defending lawsuits because they hap-               oper of ADAlawsuits.com.(E-mail: dpeters@ascervus.com)

REAL ESTATE ISSUES                                                       16                                                           SUMMER 2004
                                      Who’s Responsible for ADA Compliance?

    Defendants should not assume that a plaintiff has joined              surprised to discover that those originally thought to be
    all necessary parties in an access lawsuit; while there is a          responsible for access issues may not, in fact, be liable,
    strong incentive to do this in non-access cases, a plaintiff          while others initially overlooked should be joined.
    is probably not required to research all possible defen-
                                                                          4. AMBIGUITIES IN THE LEASE WILL GENERALLY BE
    dants and consider documents (to which they may not                   CONSTRUED AGAINST THE PARTY WHO PREPARED
    have access when the suit is filed) just to gain access to            IT
    commercial premises.1 They may be entitled to sue just                Many landlords have tried to convince tenants that they
    one party doing business on the property; the party they              have taken on the responsibility of making fundamental
    sue has the right to bring in other parties responsible for           structural improvements to the landlord’s property (which
    the harm, and should consider joining them at the earliest            would increase the value of the property when returned to
    possible opportunity to avoid irreparable harm.                       the landlord at lease-end), simply by virtue of the tenant
                                                                          having signed a fairly standard commercial “net” lease
    2. JOINT AND SEVERAL LIABILITY OF COMMERCIAL                          agreement. Because commercial tenants indeed take on
       LANDLORDS AND TENANTS FOR ACCESS                                   many obligations of the property owner when they enter
                                                                          many commercial leases, they often incorrectly assume
    In general, landlords and tenants are jointly responsible
                                                                          that they have undertaken all of them, or that they are
    for compliance with access laws, at least from the stand-
                                                                          responsible for “everything inside the exterior walls.”
    point of third-parties (eg, disabled visitors to the proper-
    ty); however, they are free to shift the allocation of respon-        It is a well-settled legal principle that ambiguities in a doc-
    sibility between them by contract.2 Of course, such a re-             ument will generally be construed against the party who
    allocation is only binding as between the landlord and                drafted (ie, prepared) it. The reason for this is that the
    tenant3—a disabled plaintiff will generally have recourse             party who prepares a document is in the better position to
    against both of them, and if just one of them is sued, or             make it as clear and unambiguous as possible; additional-
    found liable, s/he may have a claim against the other for             ly, the non-drafting party may not always be in a position
    indemnity and/or contribution (ie, a legal action to recov-           to meaningfully negotiate the terms.
    er losses that are another’s responsibility). The rationale
                                                                          Typically, because most commercial leases are drafted by
    for this policy is that it would be unfair to a disabled
                                                                          the landlord, matters of uncertainty will often be con-
    plaintiff if a landlord tried to avoid making access renova-
                                                                          strued in the tenant’s favor because the landlord would be
    tions by leasing only to tenants with limited resources or
                                                                          seen as having more time and opportunity to clarify
    for tenants to avoid taking responsibility for removing
                                                                          uncertain terms, and the tenant might have less ability to
    access barriers over which they have complete control.
                                                                          bargain. Accordingly, unless the tenant expressly agreed in
                                                                          writing to make specific structural renovations to the
       RESPONSIBILITY FOR THE LAWSUIT                                     property, many attorneys do not believe that relatively
    Too often, a party is sued, assumes they are at fault, and            standardized provisions, like those found in many com-
    just starts defending the lawsuit. Sometimes they are cor-            mercial “net” leases, transfer the landlord’s obligation to
    rect; often they are not. More commonly, there are a                  make significant access improvements to the tenant.
    number of individuals and firms that may bear some
    responsibility for the problem, and the participation of              5. WHAT DOES THE LAW SAY?
    multiple defendants can ease the burden of resolving any              As of the date of this article, many jurisdictions lack deci-
    access case considerably.                                             sive case law that confirms the respective responsibility of
                                                                          landlords and tenants under standard commercial leases;
    It is essential to consider which parties should be included          additionally, commercial lease terms vary considerably,
    in a lawsuit at the earliest possible opportunity. For exam-          despite the fact that they are usually referred to as “stan-
    ple, because some insurance companies will cover some                 dard.” A surprising number of leases still in use do not
    ADA/access claims and others will not, one party or                   address the responsibility for access compliance and
    another may have insurance that will cover a claim while              claims, and this obligation is substantially different from
    another may not. As facts emerge in a case through the                other obligations the tenant may assume, as discussed
    exchange of documents and information, parties are often              below. Certainly, any landlord and tenant can agree that a

REAL ESTATE ISSUES                                                   17                                                        SUMMER 2004
                                       Who’s Responsible for ADA Compliance?

    tenant will make specific structural modifications to the               visible to the naked eye and the regulations relating to
    property, but the question in most access lawsuits is                   them are matters of public record. Indeed, many busi-
    whether the standardized terms commonly found in com-                   nesspeople make their own accessibility inspections and
    mercial net leases would in fact transfer the obligation to             renovations without the use of experts, and sometimes do
    the tenant without such an express agreement.                           it properly, based solely on the diagrams and guidance in
                                                                            the ADA Accessibility Guidelines (“ADAAG”), state build-
    Because most commercial leases rarely identify specific
                                                                            ing codes and other similar sources. Of course, such “self
    access improvements the tenant agrees to make, many
                                                                            help” can also result in costly mistakes.
    landlords have tried to claim that standard commercial
    lease terms require the tenant to make such improvements                The fact that the overwhelming majority of access impedi-
    by implication (ie, based on cases that have interpreted                ments are visible to both landlord and tenant, and each
    certain standard lease terms to require the tenant to                   are deemed to be “on notice” of the access laws means, for
    undertake certain renovations, which were unknown at                    practical purposes, that both landlord and tenant “knew”
    the time the lease was executed). Of course, an important               (or should reasonably have known) that the property was
    difference between the facts in these cases and most                    noncompliant at the time it was leased (or the lease
    ADA/access cases is the fact that the need for access reno-             renewed) and knowingly failed to make written arrange-
    vations is usually apparent to the unaided eye, and both                ments for any structural renovations that were required.
    landlord and tenant are equally charged with knowledge                  Under these circumstances, it seems reasonable to assume
    of the noncompliance of the facility; accordingly, there is             that the tenant agreed to comply with all laws within the
    no “surprise” as there is in the cases on which many land-              confines of the premises s/he leased, but not to improve
    lords have tried to rely (as discussed below).                          them by making significant structural renovations, unless
                                                                            the parties expressly entered into a clear written agree-
    In one California case, Botosan v. Fitzhugh4 held that one
                                                                            ment providing exactly for that. Many judges may be
    commercial lease for a chain “fast food” restaurant did not
                                                                            reluctant to invest valuable court time considering an
    transfer responsibility for access improvements from land-
                                                                            issue the parties were free to address for themselves when
    lord to tenant, based on the standard “compliance with
                                                                            they entered the lease—at least to the extent that the land-
    laws” provisions it contained. Since Botosan, many land-
                                                                            lord wants the court to interpret a broader obligation for
    lords have attempted to claim that other provisions in
                                                                            the tenant than the plain reading of the document they
    standard commercial leases somehow operate collectively
                                                                            prepared might create.
    to shift this burden in situations where there was no clear
    agreement about responsibility for specific structural ren-
                                                                            5A. THE LEGAL FRAMEWORK
    ovations that needed to be made. Because many of the
                                                                            As of the date of this article, commercial landlords may
    ADA compliance disputes between landlords and tenants
                                                                            still be unable to point to a case or law that allows them to
    arise in smaller properties, they are less likely to be litigat-
                                                                            transfer responsibility for access law compliance to their
    ed. Unfortunately, this forces consideration of similar, but
                                                                            tenants through the standardized general terms of most
    not identical cases, that may not be entirely comparable.
                                                                            commercial leases—the matter will most likely remain an
    In California, the cases that currently come closest to pro-            arguable question of fact a judge or jury would have to
    viding guidance on this question differ from ADA/access                 decide. For this reason alone, most commercial landlords
    cases in at least one critical respect—each of them deals               and tenants will most likely be necessary parties in many
    with relatively concealed defects in the property that                  access lawsuits. Because the terms of commercial leases
    would most likely not have been identifiable to the casual              vary considerably and the conduct of the parties will also
    observer at the time the lease agreement was signed. One                have considerable bearing on this question, it is unlikely
    case involved a structural seismic retrofit and the other               that any landlord or tenant will be able to claim that, as a
    involved the removal of friable asbestos, each problem was              matter of law, they are entitled to look to the other to take
    discovered some time after the lease agreement was                      responsibility for making access improvements to the
    signed. In each case, the problems in question would                    property, unless they have entered into a clear, express
    most likely not be ascertainable without the aid of experts.            agreement for this purpose (which is often not the case).
    In contrast, virtually all common access impediments are

REAL ESTATE ISSUES                                                     18                                                       SUMMER 2004
                                      Who’s Responsible for ADA Compliance?

    5B. HAS THE LANDLORD BEEN RELIEVED OF THE                              responsibility (which is presumed to reside with the land-
        OBLIGATION TO PROVIDE ACCESS?                                      lord) had been transferred to the tenant, in light of
    The starting point in any analysis must begin with the                 Sections 4 and 5b, above?
    premise that the landlord never loses the obligation to
    provide access to the property—public policy requires that             Two California cases provide guidance as to some of the
    some party be continuously responsible for health and                  issues courts consider relevant in resolving disputes over
    safety issues for any given property. In many jurisdictions            problems that were unknown to both landlord and tenant
    including California, this obligation is presumed to rest              when the lease was signed:
    with the landlord,5 and the landlord may contract with                 n   Hadian v. Schwartz 7 confirmed that a commercial
    others (including tenants) to fulfill this obligation, but will            tenant who had renewed a three-year lease for an
    never be relieved of it with regard to the claims of third                 additional five-year period had not assumed the
    parties (such as disabled visitors). Of course, if the tenant              obligation of paying for a seismic retrofit required
    makes fundamental changes to the leased premises, s/he                     by the City of Los Angeles solely by virtue of having
    may take on the obligations of the landlord with regard to                 executed a standard “fill-in-the-blanks” commercial
    those changed areas for claims of inaccessibility by dis-                  net lease.
    abled visitors to the premises.6 While the tenant(s) would
    certainly have undertaken the obligation to provide barri-             n   Brown v. Green8 held that commercial warehouse
    er-free access within the areas leased to them, is there evi-              tenants did assume the responsibility for removing
    dence that the tenant agreed to take on the additional obli-               asbestos-laden material from a building, even though
    gation of making structural improvements to the proper-                    such renovation would inure to the landlord’s long-
    ty, which would return a better building to the landlord at                term benefit, when the tenants, who were particularly
    lease-end than was received?                                               sophisticated in commercial leasing, had been
                                                                               advised in advance of the possibility that such con-
    5C.GUIDANCE FROM NON-ADA CASES                                             tamination might exist and declined to inspect for it,
    ADA/access cases are a fairly recent phenomenon, while                     nevertheless signed a long-term lease in which a
    disagreements between landlords and tenants over respon-                   majority of the risks of ownership were expressly
    sibility for repairs have persisted for centuries. While cases             shifted to the tenant.
    interpreting these disputes will most likely not resolve all           The Hadian and Brown cases were decided the same day
    landlord/tenant issues in an ADA/access lawsuit, they can              and reached different conclusions. Both cases were decid-
    provide limited guidance until more applicable cases                   ed by the California Supreme Court, and the Court
    become available. An essential distinction between this                applied many of the same factors to each case. In each
    line of cases and most ADA/access lawsuits is that the                 case, the specific facts and circumstances (including the
    defects in these cases were concealed or otherwise not like-           conduct and experience of the parties and the specific lan-
    ly to be seen by the casual observer, as they are in                   guage of the lease) determined the outcome of the case.
    ADA/access lawsuits.                                                   As stated above, each of these cases involved “surprises”
    In access cases, there can usually be no question that any             that were discovered during the term of the lease—quite
    party visiting the property would have had to look at—if               different from the access obligations, of which landlords
    not physically pass through—the same path of travel a                  and tenants have had at least “constructive” notice for
    disabled visitor would use. Thus, it would be rare for any             some time.
    access impediment not to have been seen by even the
    most casual visitor (even if not understood to be an arti-             6. WHY IT IS IMPORTANT TO DETERMINE
                                                                              THE EXACT PROBLEMS THE DISABLED VISITOR
    cle), and both landlord and tenant are deemed to have
                                                                              ENCOUNTERED ON THE PROPERTY
    “constructive” (imputed) knowledge of all access laws and
                                                                           Basically, most access lawsuits are filed because a disabled
    regulations. Accordingly, if both the landlord and tenant
                                                                           plaintiff claims they encountered difficulty entering a
    must be presumed to know of a problem and declined to
                                                                           facility or had problems once inside. Because disabled
    clearly confirm the responsibility for remediating it in the
                                                                           plaintiffs are not required to attempt to enter premises
    agreement between them, how can we assume that the
                                                                           that appear physically inaccessible,9 they will often do a

REAL ESTATE ISSUES                                                    19                                                       SUMMER 2004
                                        Who’s Responsible for ADA Compliance?

    “drive by” and properly determine that access impedi-                    vations which would improve the property the landlord
    ments make entry potentially dangerous. Nevertheless,                    will receive back at lease-end, or to defend lawsuits result-
    the lawsuits they file are often replete with references to              ing from structural inaccessibility. This question was
    the barriers inside the premises. This is because they may               addressed in Botosan10 where the relevant provision of the
    have a friend or a scout enter the premises to gather infor-             commercial lease stated “Tenant shall . . . keep and main-
    mation about problems inside.                                            tain . . . the Premises . . . in compliance with all laws and
                                                                             regulations . . .”. The Botosan court considered a number
    The significance of identifying the specific obstacles the
                                                                             of common provisions of commercial leases, which were
    plaintiff actually encountered can prove fairly important
                                                                             also found in the lease in question, including one which
    in apportioning liability between landlords and tenants in
                                                                             required the tenant to obtain the landlord’s approval for
    access lawsuits. For example, if the plaintiff revealed that
                                                                             any major renovations to the leased premises; based on
    s/he made a determination from the appearance of the
                                                                             these, they rejected the landlord’s claim that the responsi-
    exterior that entering business premises was unwise or
                                                                             bility for access compliance had been shifted to the com-
    potentially dangerous, it might support an inference that
                                                                             mercial tenant, in this case, a small Mexican restaurant
    all, or substantially all, of the cost or liability of the access
                                                                             that was part of a chain. The Botosan court went on to
    lawsuit should properly be borne by the landlord.
                                                                             say “ . . . even if the lease allocated all responsibility to the
    Likewise, if all of the access impediments complained of
                                                                             tenant, that would not insulate [the landlord] from liabili-
    by the plaintiff were of a structural nature (eg, matters
                                                                             ty under the ADA. Under the ADA liability attaches to
    that existed on the property the day the tenant took pos-
                                                                             landlords and tenants alike.” Based on the foregoing, if
    session), a similar result could be reached. However, if it
                                                                             landlords want such “compliance with laws” provisions of
    appeared that the building and property were not the
                                                                             leases to be construed to require tenants to make funda-
    problem, but a rolling rack or moving palette blocked
                                                                             mental structural improvements to the leased premises (ie,
    access on the day in question, a majority (if not all) of the
                                                                             improving them over the condition in which they were
    liability might be borne by the tenant. In many cases, it
                                                                             received)—and not just to obey all laws in conducting
    will be a combination of factors—some the responsibility
                                                                             their operations—they should make this conspicuously
    of the landlord and some the responsibility of the ten-
                                                                             clear in the agreements they prepare.
    ant—which result in access claims; understanding exactly
    which problems led to the claims is essential to any later
                                                                             7B. “TENANT SHALL INDEMNIFY LANDLORD FOR
    apportionment of liability between landlord and tenant.                      ALL CLAIMS ARISING OUT OF TENANT’S USE OF
                                                                                 THE PROPERTY”
    7. COMMON LEASE PROVISIONS:                                              Many commercial landlords have attempted to persuade
    Several common lease provisions, particularly those found                tenants that they are required to indemnify them for
    in commercial “triple-net” leases, contribute to the misun-              access claims, even if there is no evidence that the claim
    derstanding between landlords and tenants as to which of                 resulted from any act or omission by the tenant—for
    them is responsible for renovations and compliance with                  example, if the plaintiff just did a “drive by” and was dis-
    access laws:                                                             couraged from entering by the structural inaccessibility of
                                                                             the premises (and not, for example, some impediment the
    7A. “TENANT IS RESPONSIBLE FOR COMPLYING                                 tenant had introduced to the property).
    A common provision of many commercial leases is a                        In many states, it is well settled that one cannot seek
    requirement that the tenant comply with “all applicable                  indemnification for one’s own negligence.11 To the extent
    laws.” A plain reading of such provisions requires that the              a property owner has failed to comply with applicable
    tenant not violate the law in the things they do within the              access laws or regulations, s/he may not be entitled to
    areas they are leased.                                                   demand indemnification from a tenant, when the decision
                                                                             to refrain from making access renovations on an ongoing
    Some landlords have suggested that such a provision                      basis may be deemed to be a conscious, deliberate and/or
    requires the tenant to make fundamental structural reno-                 intentional one.12 Thus, the question is whether the claim

REAL ESTATE ISSUES                                                      20                                                          SUMMER 2004
                                     Who’s Responsible for ADA Compliance?

    arises out of the tenant’s use of the property or the land-          8. IS THE PROPERTY EXEMPT FROM COMPLIANCE
    lord’s ongoing negligence in failing to renovate it. Clearly,           OR “GRANDFATHERED”?
    the analysis in Section 6, above, becomes more relevant in           A striking number of defendants incorrectly believe that
    cases like this.                                                     their properties are exempt from compliance with access
                                                                         laws (because they have been “grandfathered” in some
    A tenant or franchisee in an access case should also con-            respect) because they are of a certain age, or because no
    sider a cross-claim for “equitable indemnity” against the            major renovation has ever been performed. While it is
    landlord or franchisor, even if there are provisions in the          not the intention of this article to provide legal advice
    lease or franchise agreement whereby the tenant/fran-                about specific renovations that are required for any partic-
    chisee agrees to indemnify the lessor or franchisor. In              ular property, the reader is reminded that:
    many cases, the tenant or franchisee will read provisions
    whereby they have agreed to indemnify the landlord or                n   The ADA requires removal of such access impedi-
    franchisor and incorrectly conclude that they have under-                ments as are “readily achievable” for the defendant,13
    taken an unqualified obligation to indemnify them for any                there is no “exception” or “grandfather” provision
    and all claims, including the landlord’s or franchisor’s neg-            exempting older properties.
    ligence. As discussed above, however, a landlord or fran-
                                                                         n   The ADA and attendant regulations confirm that
    chisor may be partially or fully responsible for the harm                what is “readily achievable” depends on the total
    from which the claims arise, and such indemnification                    financial resources of both the commercial tenant and
    provisions may well not require the tenant/franchisee to                 property owner,14 and would presumably include
    indemnify the landlord or franchisor from their own neg-                 equity in the property. Many defendants read this
    ligence. The problem, of course, is that if the tenant or                and think they will assert the defense that a particular
    franchisee does not assert these claims early in the lawsuit,            renovation was not “readily achievable” for them
    they may be barred.                                                      because it was too expensive or complicated; once
                                                                             they find out they will have to produce their financial
    7C.THE REPAIR COVENANT                                                   statements to support this argument, they often re-
    Although a tenant’s covenant to repair and maintain the                  evaluate this position, but only after considerable
    property, usually at the tenant’s expense, is a common                   time and legal expense. Assuming all appropriate
    provision in many commercial net leases, the Hadian and                  defendants are joined in an action (see Section 10,
    Brown courts each considered this obligation in their                    below), and considering the vast increase in equity
    analysis. Because a requirement to repair or maintain the                that has applied to commercial real estate in many
    property may under certain circumstances be interpreted                  parts of the country, it may be difficult to argue that
    to require the tenant to repair the item in a manner that                almost any barrier removal was not “readily achiev-
    causes it to comply with current law, some landlords have                able” at many properties.
    tried to argue that the tenant should be required to
    improve non-complying areas of the property by bringing              n   Certain state laws enhance the power of the ADA, and
    them up to current accessibility standards (ie, that the                 should not be overlooked; for example, California’s
    inaccessible areas of the property are “broken” and it is the            Unruh Act provides that a violation of the ADA (and
    tenant’s obligation to “fix” them). The analysis in Hadian               presumably the ADA Accessibility Guidelines, or
    and Brown, above, confirms that such arguments may be                    “ADAAG”) constitutes actionable discrimination.15
    ambitious, at best. In addition, additional clauses, such as
    (1) the tenant’s obligation to return the property to the            9. THE NEED TO REVIEW, AND REVISE, LEASE
    landlord in substantially the same condition to the land-               AGREEMENTS
    lord, and (2) limitations on the tenant’s right to make sig-         More than a decade after the passage of the ADA, a
    nificant structural (or any unapproved) modifications, can           remarkable number of leases remain silent about the allo-
    provide important clarification of this question.                    cation of responsibility for complying with access laws and
                                                                         regulations, and/or the lawsuits for noncompliance. The
                                                                         time may be fast approaching, if it is not already here,
                                                                         when courts will have lost sympathy for any party who

REAL ESTATE ISSUES                                                  21                                                      SUMMER 2004
                                     Who’s Responsible for ADA Compliance?

    doesn’t make advance written arrangements clearly appor-             n Lawyers (to the extent they prepared commercial leases
    tioning responsibility for access matters; the ADA is here             since the access laws in question were enacted that did
    and is not going away. If landlords want to shift this bur-            not address the issue of responsibility for access renova-
    den to tenants, they will need to do so through particular-            tions and defense of access lawsuits);
    ly clear and conspicuous terms.
                                                                         n Lawyers in previous access lawsuits on the same prop-
                                                                           erty or issue (to the extent they demanded fewer reno-
                                                                           vations than were actually necessary/required in
    Initial defendants should consider all of the following cat-
                                                                           exchange for a larger payment to their clients or them-
    egories of potential defendants in a lawsuit before con-
                                                                           selves, and sought or received fees based on an assertion
    cluding that they are solely responsible for defending it (of
                                                                           that their work was responsible for a significant benefit
    course, this list is not all-inclusive):
                                                                           to society under, for example, “Private Attorney
    n Architects and other design professionals (depending                 General” provisions like California’s Code of Civil
      on the date of the design and the agreement of the par-              Procedure § 1021.5);
                                                                         n Municipalities (depending on when building permits
    n Coastal, district and other agencies and commissions                 were issued and whether compliance with applicable
      (to the extent they prevent necessary/appropriate reno-              access laws was expressly disclaimed, to the extent not
      vations from being made, or failed to require them dur-              immune from suit);
      ing the approval process, and to the extent they are not
                                                                         n Plaintiffs (to the extent they engaged in intentional
      immune from suit);
                                                                           conduct that could create or exacerbate their harm);
    n Contractors (depending on the date of
                                                                         n Previous occupants (to the extent they took, or
      construction/renovation and whether the contractor
                                                                           refrained from taking, actions that had a material
      was responsible for causing the work to comply with
                                                                           impact on the accessibility of the property or failed to
      access requirements);
                                                                           comply with access laws);
    n Experts in previous access cases (to the extent they
                                                                         n Property Owner(s), who, in most cases, would never be
      failed to identify appropriate renovations and the law
                                                                           relieved of the obligation to the disabled community to
      has not changed with regard to the claims in the cur-
                                                                           cause their properties to comply with access laws;
      rent lawsuit);
                                                                         n Realtors (to extent noncompliance with applicable laws
    n Franchisors (to the extent they designed/built premises
                                                                           was not disclosed; or appropriate inspections were not
      in question, dictate operating policy at franchisee’s
      facilities, inspect for violation of laws/compliance with
      regulations, have renewed franchise agreements with-               n Sellers (to the extent notice of noncompliance with
      out requiring compliance since the accessibility laws in             applicable laws, or prior lawsuits, were not disclosed or
      question were enacted, etc.);                                        if they failed to comply with applicable access laws);
    n Historic site board(s) (to the extent they made determi-
      nations about renovations that would be required or                n Tenants, who would never be relieved of the obligation
      allowed after applicable access laws were enacted, or                to comply with access laws, at least within that portion
      refuse to permit a property owner to make necessary                  of the premises they occupy.
      access renovations, to the extent not immune from
                                                                         Based on all the foregoing, it is essential that all necessary
                                                                         parties be involved in the resolution of an ADA/access
    n Landlords (to the extent the landlord is different from            lawsuit at the earliest possible opportunity.
      the property owner and/or has engaged in activity
      (including without limitation a decision to refrain from           11.SPECIAL CONSIDERATIONS FOR FRANCHISES
      removing access impediments) that could be claimed to              Many franchise chains have been especially hard-hit by
      be discriminatory to the disabled);                                ADA/access lawsuits. In some cases, this is because fran-

REAL ESTATE ISSUES                                                  22                                                         SUMMER 2004
                                      Who’s Responsible for ADA Compliance?

    chise chains are perceived to have greater financial                 al, state and local standards, ensuring that construction
    resources available to meet accessibility obligations, or to         irregularities don’t form the basis for future claims, regu-
    pay judgments.                                                       larly inspecting for vandalism and keeping up with the
                                                                         constant stream of changes in standards—can be an over-
    Many franchise chains have made commendable progress
                                                                         whelming task for access professionals, much less those
    in ensuring compliance standards in each of their loca-
                                                                         who find running their businesses to be more than a full-
    tions while others, astoundingly, have done almost noth-
                                                                         time job. An ADA/access lawsuit will not make things
    ing. Worse still, many new locations do not meet applica-
                                                                         simpler. A business that has not been sued has an invalu-
    ble access standards and are subject to suit virtually from
                                                                         able opportunity to save tens, if not hundreds, of thou-
    the day they open.
                                                                         sands of dollars by taking immediate action.
    Remarkably, many of these franchisors have taken the
                                                                         The first step in preventing, or resolving, an ADA/access
    position that the franchisee must bear the financial
                                                                         lawsuit is to have the property inspected by a highly quali-
    responsibility for access lawsuits, even though the basis for
                                                                         fied inspector. It is extremely important that the inspector
    the lawsuit relates directly to the franchisor’s design or
                                                                         be retained through an attorney so that the report is pro-
    policies. Many franchisors have attempted to invoke
                                                                         tected by the attorney-client and/or attorney work prod-
    indemnification provisions to require the franchisee to, in
                                                                         uct privileges; without such protection, the report can be
    essence, indemnify the franchisor from the franchisor’s
                                                                         obtained in any future lawsuit, and could be deemed
    own negligence (see Section 7b, above). Such positions
                                                                         notice of noncompliance.
    should be carefully scrutinized in that it is usually the
    franchisor who:                                                      While it has always been riskier to do business or hold
                                                                         property in one’s own name, the increase in access litiga-
    (1) designed, approved and/or built the structures on the
                                                                         tion make it even less advisable. Because the obligation to
                                                                         make renovations can depend upon the financial
    (2) regularly inspects the property for compliance with              resources of the defendants, defendants with significant
    laws (surprisingly, though, access laws are often not part of        financial resources are particularly at risk. Accordingly,
    these inspections), and                                              property owners should consider holding the property in
                                                                         a separate limited liability company (“LLC”) or a limited
    (3) imposes contractual provisions prohibiting changes to
                                                                         partnership with a corporate general partner. Commercial
    the property without franchisor approval.
                                                                         tenants should also consider doing business as a corpora-
    Often, franchisees are immediately cited for violations that         tion or LLC.
    could injure the non-disabled, but violations of decade-
                                                                         Business owners need to understand that there is generally
    old access laws are ignored, so lawsuits often come as a
                                                                         no limit to the number of times they can be sued about
    complete surprise to the franchisee.
                                                                         even minor non-compliance with access laws. The num-
    Franchisors should immediately institute chain-wide com-             ber of “professional plaintiffs” seems to increase on a daily
    pliance requirements, certainly for the renewal of franchis-         basis, and judges are becoming increasingly reluctant to
    es, but franchisees should not wait for franchisors to do            shelter firms that have ignored a law passed in 1990.
    this—a lawsuit may already be pending. Franchisees                   Businesses should evaluate access renovations in terms of
    should demand that franchisors play a strategic role in              the considerable cost of litigating the failure to make
    chain-wide access renovations, because they can accom-               them. Landlords and tenants—and especially fran-
    plish such renovations far more cost-effectively than indi-          chisors—should all work together to prevent a problem
    vidual franchisees. Because the renovations will make the            from becoming a crisis.n
    properties more valuable, the property owners should also
    play a financial role in the process.

    Anyone who has completed accessibility renovations
    knows it can be an overwhelming task—reconciling feder-

REAL ESTATE ISSUES                                                  23                                                       SUMMER 2004
                                                  Who’s Responsible for ADA Compliance?

    1. Independent Living Resources v. Oregon Arena Corp, 982 F. Supp 698, 768 (D. Or.
    1997) supplemented 1 F. Supp 2d 1159 (D. Or. 1998)

    2. Botosan v. Fitzhugh 13 F. Supp 2d 1047, 1054 (S.D. Cal 1998)

    3. A number of jurisdictions have laws that support this principle, as one such
    example, California Civil Code §3513 confirms that “. . . a law established for a
    public reason cannot be contravened by a private agreement.”

    4. Botosan, infra.

    5. Glenn R. Sewell Sheet Metal v. Loverde (1969) 70 C2d 666, 672 n6, 75 CR 889

    6. Sewell, infra

    7. Hadian v. Schwartz (1994) 8 Cal 4th 836; 35 Cal Rptr. 2d 589; 884 p2d 46

    8. Brown v. Green (1994) 8 Cal 4th 812; 35 Cal Rptr 2d 598, 884 P2d 55

    9. 42 USC §12188; also see Pickern v. Holiday Quality Foods 2002 293 F. 3d 1133

    10. Botosan at 1053

    11. For example, in California Rooz v. Kimmel (1997) 55 Cal App 4th 573; 64 Cal
    Rptr 2d 177 and it’s progeny provide considerable guidance; an exception to this
    rule is that when a contract expressly provides that a party will be indemnified
    against that party’s own negligence, as is the case in insurance policies. In such
    cases, however, the requirement that a party is being indemnified against his/her
    own negligence must be very clearly and expressly stated, as is rarely the case in
    most commercial leases. Even then, strong considerations of public policy my over-
    ride such provisions, particularly when the indemnitee has foreknowledge of a
    problem that could trigger indemnification, as in Westlye v. Look Sports, Inc.,
    (1993) 17 Cal App 4th 1715.

    12. Modern Development Company v. Navigators Insurance Company (2004)
    111CA4th 932

    13. The Americans with Disabilities Act of 1990 42 USC 12101; specifically
    §12182(b)(2)(a)(iv), (v) and (vi)

    14. 42 USC 12181(9)

    15. California Civil Code § 54(c)

REAL ESTATE ISSUES                                                                       24   SUMMER 2004

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